Update 9/11/2018
Audit: IRS May Have Processed More Than 1M Bogus Power-of-Attorney Requests
By Toby Eckert
The IRS may have processed more than 1.1 million requests for power of attorney that weren't authorized by the taxpayer, according to an audit released today.
Approval of the requests allows third parties like attorneys and CPAs to get access to a person's tax information.
"Tax examiner reviews of these forms do not include steps to verify that the legitimate taxpayer submitted or signed the form to authorize access to his or her tax information," according to the report by the Treasury Inspector General for Tax Administration.
However, the IRS called TIGTA's estimate "substantially overstated" based on its own discovery of potentially fraudulent authorization forms.
"As of June 2018, we have implemented several actions to reduce the risks associated with potentially fraudulent authorizations," including better procedures to identify such authorizations in the agency's Centralized Authorization File, according to an agency response included in the TIGTA report.
TIGTA also criticized the IRS for "inaction" on implementing a new third-party authorization tool, which would require multi-factor authentication of requests for power of attorney.
Agency officials said they submitted a work request for the tool to an IRS steering committee in January 2017, but it was rejected and the request was canceled in September 2017.
"Although this work was not funded for fiscal year 2018 ... it cannot be concluded that this work is not a priority for the IRS," the agency said, adding that it "will continue to purse implementation of an online authorization interface."